Dueling Auctions Compete for Collectors in Hong Kong

Poly Auction and China Guardian host rival auctions in Hong Kong this weekend. Among Poly’s offerings is Liu Ye’s ‘Composition of Red, Yellow and Blue,’ estimated to achieve up to $2.3 million.

A year after landing in Hong Kong, China’s top two art auction houses are getting bolder and bigger.

This weekend Poly Auction and China Guardian are holding their largest sales in their short history in Hong Kong, the only city in which they operate in outside of mainland China.

The competition is stiff. The firms are not only battling head-to-head for business at the same time, but they are also going up against Sotheby’s, which today begins a five-day bumper sale to mark its 40 years of operation in Asia.

The timing is deliberate. Sotheby’s typically schedules its fall sales over the mainland Chinese holiday season known as “Golden Week,” which follows National Day on Oct. 1. The holiday is a popular time for wealthy mainland tourists to visit Hong Kong, and the Chinese auction houses are hoping to also ride on the incoming wave of deep-pocketed buyers.

“Timing is important, and this is the time all the collectors gather,” said Hu Yanyan, Hong Kong president of Guardian, which last year held its fall sales in the city at the same time as Sotheby’s.

The Chinese auction houses view Hong Kong as a gateway to the international market and strategically important for their growth.

“In Beijing, we follow the economy, and that’s been on a downward trend for us. But in Hong Kong, we’re growing and getting bigger,” said Zhao Xu, executive director of Poly in Beijing.

Now, the Chinese firms are expanding their offerings and flexing their organizational muscles. Poly is holding a three-day sale at Hong Kong’s Grand Hyatt hotel, with around 2,000 items valued at $89.7 million. Last year, it offered 409 lots and generated $66.8 million over two days.

Guardian, in its two-day sale at the Island Shangri-La hotel, will offer around 600 lots worth an estimated $14.3 million. Last year it offered 358 lots and achieved $23.9 million in its one-day sale.

All the items at the two firms’ Hong Kong sales have been sourced from outside of China, with many of the works coming from the U.S.

Poly, in particular, is aggressive in pursuing consignments in the U.S. among the overseas Chinese population, regularly touring California and New York and advertising in local Chinese media to encourage people to part with their treasures.

Until last year, Hong Kong was dominated by the world’s two largest auction houses, Christie’s and Sotheby’s. But last fall, China’s top two firms – Poly and Guardian, ranked third and fourth globally – entered Hong Kong for the first time.

What sells well in Beijing isn’t necessarily what sells in Hong Kong, the Chinese firms have learned. Poly said its top category in Hong Kong is modern and contemporary art, followed by ceramics, jewels and traditional Chinese paintings. In Beijing, the categories rank in the opposite order.

Guardian’s Ms. Hu said “tastes are different” between the two markets. Hong Kong is much more receptive to contemporary art because “it’s a much more international market,” and the firm will be selling contemporary Chinese oil paintings in the city for the first time. Still, Ms. Hu said about 80% of its buyers at its Hong Kong sales are from mainland China.

Meanwhile in China, both Sotheby’s and Christie’s are invading Poly’s and Guardian’s home turf. Last month, Christie’s held its first sale in Shanghai, while Sotheby’s has held two small sales in Beijing in its joint venture with local partner Gehua.

Both Sotheby’s and Christie’s are forbidden by the Chinese government from trading “cultural relics,” a fact that blocks them from selling traditional Chinese paintings and antiques – the two highest-selling categories for mainland Chinese auction firms.

“I don’t see them as competition,” said Poly’s Mr. Zhao, referring to Christie’s and Sotheby’s. “The regulation won’t change anytime soon. It’s a measure to protect local industry.”